The B.C. Supreme Court's decision in Alsip v. Top
Rollshutters Inc. (c.o.b. Talius), 2015 BCSC 1166 serves as a
cautionary tale to employers when they are preparing employment
contracts. Ambiguity in employment agreements is likely to be
interpreted in favour of employees and can prove very costly,
particularly where the contract in question is found to be a fixed
term employment agreement.
In 2012 the parties in Alsip negotiated the
plaintiff's potential employment as director of sales.
Following an initial offer, the parties modified a few terms of the
contract and added a term that the agreement was a three year
employment contract. The plaintiff signed the modified offer and
commenced employment with the defendant. Approximately nine months
into the three year fixed term, the plaintiff was terminated
without cause and provided with two weeks' salary in lieu of
notice. The plaintiff declined an offer of a further six weeks
salary in exchange for his signature on a release of further
claims. He obtained replacement employment at a lower salary and
commenced legal action against the employer.
The plaintiff relied on case law which holds that when an
employee is dismissed without cause prior to the end of a fixed
term contract the employee is entitled to payment of the balance of
the fixed term contract less the amount he/she earned from
The employer argued that the reference in the offer of
employment to three years was intended to indicate only that the
plaintiff's employment would be for a maximum of three years
but that the employer retained the ability to terminate the
plaintiff with reasonable notice.
The Court did not accept the employer's argument noting that
this argument was not supported by the wording of the employment
agreement which had been drafted by the employer: "if the
[employer] had intended to include a provision to allow termination
on notice, it could have included the same".
The Court found that the agreement between the parties was a
fixed term contract and awarded the plaintiff more than $141,500,
the amount owing to the plaintiff for the remainder of the three
year fixed term agreement less the amount the plaintiff earned from
his replacement employment during this period.
Lessons for Employers
When interpreting an employment
agreement a court will apply the principle of contra
preferentem which means that it will interpret ambiguity
unfavourably to the drafter of the agreement. As it is employers
who often draft employment agreements it is imperative that
employers avoid unnecessary ambiguity and clearly set out all terms
that are intended to form part of an employment agreement. The
employment agreement in Alsip was a one page employment
offer letter which lacked clarity. This ambiguity ended up costing
Absent clear wording that allows an
employer to terminate a fixed-term agreement early, the measure of
damages when an employee is dismissed without cause during a fixed
term agreement will be the compensation still due to the employee
for the remainder of the term of the agreement, less any income
earned by the dismissed employee in mitigation of his/her damages
during the term of the agreement. The Court's decision in
Alsip shows that such damages can be very sizeable and
disproportionate to an employee's length of service.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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